The Value of Mexican Real Estate

As real estate markets begin to feel the effects of the financial crunch engulfing the world, a number of people have been contacting us to ask how real estate prices in Mexico are being affected by events.

Mexico’s real estate markets are highly localized and accurate data in regard to prices and historical trends is not easy to come by.  Long-established local realty agents are the best people to talk with to get an indication of prices in a given market; however, there is no publicly-accessible central register of prices or trends, and even some of the ‘informal’ registers which exist may peddle doubtful data, as sellers are not always forthcoming about the full details concerning the prices at which properties changed hands.

Official registers do exist – on records at local government offices – but getting access to these data is difficult, and it’s near-impossible for any individual to build up a true picture of what is happening regionally or nationally.

As a result of this situation, the price of a piece of land or a property in Mexico is most-often arrived at using combination of ‘what the current owner is asking or willing to accept’ coupled with ‘what someone is willing to pay’.

Many foreigners who have been purchasing real estate in Mexico have purchased using cash, by trading down from (or out of) property markets in their home countries.  This can provide an additional support mechanism for the market, as the people who own the properties have no immediate need to sell them; for example, because they cannot afford to finance the repayments.

As the real estate market contracts, areas likely to continue benefiting from investor interest are smaller places off-the-beaten-track, or places offering a diversity of investment choices.

We’ve spoken to the owners of El Dorado Ranch in San Felipe, Baja California.  San Felipe is just a two-hour road trip from the US border making it a drive-destination in Mexico, and thus the area has attracted a distinct type of purchaser.  Sales units are down as they are in most places, but they are still seeing movement in the market, especially among their value-priced inventories.  Prices have held steady, remaining at pre-crunch levels.  They are also continuing to sell some beachfront condos – the higher priced properties on the development – albeit reduced volumes.

Diversity appears to be another key that attracts investor interest.  In the last week alone, El Dorado Ranch have received over 100 inquiries for their so-called “solar property” – low-cost land which is specifically earmarked for the development of sustainable eco-homes in Mexico.

Popular places like southern Baja, Puerto Vallarta, and the Riviera Maya are experiencing a slack in demand compared to recent years, although in Vallarta, for example, the slack in US and European buyers is being taken-up by Canadian and Mexican buyers.

Real estate investment continues to be attractive in Mexico for another significant reason: the total cost of ownership is low.  Lower property taxes, lower land and construction costs, lower maintenance fees and a lower cost of living in comparison to the US (and especially in comparison to Europe) make Mexico an attractive long-term prospect.

Find more information on our guides to Real Estate in Mexico